What is a performance obligation under ASC 606?
ASC 606 defines a performance obligation as a promise to transfer goods or services (or a bundle of products or services) to a customer that are either: A collection of distinct goods or services with the same pattern of transfer to the customer.Click to see full answer. Keeping this in consideration, what are performance obligations?Identifying…
ASC 606 defines a performance obligation as a promise to transfer goods or services (or a bundle of products or services) to a customer that are either: A collection of distinct goods or services with the same pattern of transfer to the customer.Click to see full answer. Keeping this in consideration, what are performance obligations?Identifying Performance Obligations. A performance obligation is a promise to deliver a good or provide a service (or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer).Furthermore, is a coupon a performance obligation? Customer Reward Points, Gift Cards, Coupons, and Other Loyalty Programs: Choices that allow customers to acquire supplementary goods or services for free or at a discount would likely represent a separate performance obligation if it gives the customer a material right that it otherwise would not have received without Then, what is a performance obligation as it relates to revenue recognition? A performance obligation is a promise to provide a “distinct” good or service to a customer. This is the unit of account for applying the new revenue standard. The good or service must be capable of being distinct, and it must be distinct in the context of the contract.What is a material right under ASC 606?ASC 606 introduces the new concept of a material right, which requires significant judgement on the part of management. A material right is an option to purchase additional goods or services at a price that is less than what the customer would have paid if they had not entered into the contract.
